Is the Cash for Guzzlers law worth
it? Right off the bat I want to YELL YES! But I can't help wonder how
bad this program is going to be.

Let's start by spelling out the basics of this new government backed
incentive program. The goal is to get gas guzzling vehicles off the road
and stimulate new car sales. You can get a voucher for $3,500 - $4,500
toward a new car purchase. Here are the main points:

This program is for new car purchases only.

It will be active from July 23 to November 1.

The car traded in must get 18 mpg or less combined
city/highway fuel economy (based on the info at
http://fueleconomy.gov/).

You get a voucher for $3,500 if the new car gets at least 4 mpg
better mileage.

The voucher is $4,500 if the new car gets at least 10 mpg better
than the car being traded in.

Trade-ins must be vintage 1984 or newer.

Trades must be drivable and insured at trade-in time.

The vehicle must be owned for at least one year before the
trade.

Dealers are not allowed to use the voucher as a replacement for
any other incentives.

The vehicle traded in will be destroyed.

Let's start with that last one. The vehicles turned in with this
program will be crushed. This has been done before.
There have been crusher laws to get people to turn in old cars for cash
to remove these cars from the roads. That was bad for car enthusiasts
that saw that law as a way to remove restoration fodder. Plus those
programs were abused when companies were allowed to turn in the clunkers
for environment "credits" for their factories. It did nothing for the
environment to take a car sitting in a field (and not actively polluting
the environment) and allow an active factory to turn that car in to be
crushed so the factory did not have to clean up its factory.

We escape those pitfalls this time by requiring people to own and
insure the cars for a year before trading them in. In fact, as I see it
there are no loop holes for companies to abuse this new guzzler law.
Let's hope that much is true.

By making this program available to cars 1984 and newer we also save
all the classics that could find homes with restorers some day. Granted,
there may be some cars from this era that some people consider classics,
but that is less true of cars from the 20s - 60s. I would not want a
Buick Grand National or Monte Carlo SS turned in for this program, but
that is a possibility. Don't forget that Pony Cars were still popular
cars in this time. With Mustangs and Camaros both in dealerships now it
is sad to know that some Mustang GTs and IROC Camaros could be crushed.
No program is perfect.

I have addressed the issue of cars that we may not want to see
crushed, at least from an automotive enthusiast's point of view. But the
cars turned in for this program will be crushed. That
leads to the biggest problem with this program. If the
cars are to be crushed who would turn the car in?

I ask that question because the crushing of the cars means there will
never be a buyer for it. So the dealer gets nothing for it but the
voucher money. By the way, the voucher money goes to the dealer, not the
person trading in the car.

This means that the voucher is your trade in value.
This becomes a huge issue. Why would anyone trade in a vehicle worth
$3,500 to get a $3,500 voucher? This is not an incentive to increase
traffic into dealerships... something desperately needed. It is only a
chance to get the least valuable cars being driven off the road.

Remember the first item above, this program is for new cars
only. How many people out there are driving a car worth
significantly less than $3,500 that want to buy a new car? It has been
my experience that if someone drives a car to the point of being so low
in trade-in value they are more likely to buy another used car when the
current one stops running. You cannot get a used car,
not even a 2 year old Prius that gets over 40 mpg.

Since this guzzler laws seems to be targeting the lower end of the
economic scale, what if people can't afford to finance a new car, even
with the incentive? Will this make the trouble the financial
institutions are in even worse should a bunch of people have to have
their cars reposessed?

Let's look at my own guzzler. I have a 2001 Acura MDX that has a
combined EPA rating of 17 mpg. So it is eligible for the guzzler
voucher. I checked on fueleconomy.gov
and I could get a 2009 Mercury Mariner 4WD that gets a combined mileage
of 21 mpg and still receive the $3,500 voucher. So I trade in one SUV
for another. I may get a bit better mileage, but not enough to really
impact the environment.

I looked up my Acura MDX on KBB and NADA. KBB lists my Acura at
$4,950 in good condition. NADA is better, listing my MDX at $6,600 for
Average Trade-In. Why would I bother with the voucher when trading this
car in the regular way is better?

The $4,500 voucher is virtually worthless. Using my gas guzzling SUV
as an example again, I tried to find cars that I could trade for on
fueleconomy.gov. When I tried to look for an "upscale sedan"
that got 25 mpg
their site came back with nothing. Oops! Kind of makes it hard to want
to trade in a luxury SUV for a car. I even looked at coupes and only 1
coupe showed up on the site that got over 30 mpg, the Smart FourTwo.
There were 4 coupes that got 26 mpg, but none of these would qualify for
the $4,500 voucher as I need to get 27 mpg with the new car. In fact
there were precious few cars that got combined mileage of 27 or more.
Mostly hybrids like the Toyota Prius, Honda Insight and Ford Fusion.
Good cars, but not something a luxury SUV owner is likely to
trade down for.

Conclusion

How many people do you know that own a car worth significantly less than
$3,500 that they have had continually insured for a year? And how many
of them want a new car? Probably none!

In the end I like the idea of a guzzler law, especially over throwing
a lot of money at short-sighted manufacturers. I just don't see it
making much of an impact and it is not enough incentive to get a wave of
people to start buying cars.